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A restaurant has the following statistical information calculated from its financial statements for the past three years: Year 0006 Year 0007 Year 0008 Current ratio
A restaurant has the following statistical information calculated from its financial | |||
statements for the past three years: | |||
Year 0006 | Year 0007 | Year 0008 | |
Current ratio | 1.04:1 | 1.25:1 | 1.40:1 |
Credit card turnover ratio | 70 times | 64 times | 61 times |
Accounts receivable turnover | 18 times | 24 times | 31 times |
Food inventory turnover ratio | 37 times | 28 times | 22 times |
Total liabilities to total equity | 2.75:1 | 2.4:1 | 1.95:1 8.7% |
Return on stockholders equity | 9.70% | 9.50% | 8.70% |
Annual sales revenue | $875,400 | $881,900 | $879,300 |
REQUIRED: | |||
Using this information, answer each of the following questions and | |||
explain your answer. | |||
a. Are current assets in relation to current liabilities increasing or decreasing? | |||
b. Is the restaurant becoming more or less efficient in the collection of its | |||
credit card receivables? | |||
c. Is the restaurant becoming more or less efficient in the collection of its | |||
accounts receivable? | |||
d. Over the three-year period, has more or less money been tied up in food inventory? |
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